£525k mortgage at 47?

[snoktruix]

Hi all,

I'm in a somewhat difficult financial situation. Due to general lack of financial acumen and foresight.. my partner and I (i'm 47, she 45) are still renting in central London (about £2.6k pcm). We only recently came to the giant realization that we are doomed in later life if we don't get on the property ladder. So we are thinking to finally buy a flat.

I do in fact have a buy-to-let property (worth about £360k, with £250k left on the mortage), but can't release the equity on it due to cladding problems which will take years to resolve.

We have about £100k in savings, and parents can help to the tune of about £70k total with stamp duty and deposit. So we are considering to buy a 2-3 bed flat in London, for around max £625k, with a £100k deposit leaving us with £525k mortgage and some savings buffer. (Due to the unsellable buy-to-let, we would need to pay the higher stamp duty rate unfortunately, but no way to avoid it).

Due to our age, this would need to be a 22 year term, so the payments will be on the order of £2.5k pcm, at the current rates. Our combined income is about £160k (that figure includes bonus).

Do people think this sound like a viable plan? I realize that taking on this level of debt, and payments, at our age is risky. But the alternative of renting into oblivion, with no other asset than that buy-to-let, seems worse. We seem to be a the point where it's do-or-die to get back on the ladder.

Any thoughts appreciated...

Best wishes
Jim

OP you need to sit down with your OH.

Ask them about their career plans for the next 10 years and what hospitals could meet that expectation.

You do have the advantage of no children so you don't have to worry about schools, but both need to feel safe in the area walking home at night.

I have family and friends who use to all work in hospitals and they had colleagues who lived in the home counties. Their colleagues would have difficulty getting into work by public transport around holidays and their hospitals wouldn't send them a taxi all the way. (Pre-congestion charge extension they would drive in and have to park somewhere.)

Oh and most people I know who live in London live in an area they never thought they would live in. So start exploring places within 5 miles of anywhere any family and friends in London live.

Then work out from there areas you could afford to live in looking at transport options to ensure they start early enough and the alternatives on Sundays and Bank holidays.

Oh god definitely don’t move out of London if you feel like a Londoner and enjoy the city. There is nowhere like this. I have and regretted that decision. Just find a cheaper flat than £625k, and the moment it’s very very doable. People who’d never lived in London will never ‘get heir heads around’ London rent and property prices, it’s really like going abroad and calculating the exchange rate in your head every time you buy something or go to a restaurant thinking ‘well, where i live this is 3x cheaper!’. Moving to a commuter town around london will only add stress of the commute and high train fares. It’s a stupid idea.
There hasn’t been a better moment for years and years to buy a flat in London.

Dear all, My situation is husband wants £250k (half value of the house) as pay off as we're divorcing. I'm not working no income, v. Small pension, no savings. Don't know how much repayments would be if I try equity release route as I don't want to sell our house at the moment. Me and our son currently living in the property, DH comes and goes. Would value your advice please re options.

It sounds sensible to be paying off a mortgage rather than rent. Stress test to a sensible level. If you have a 22 year term and a buy to let, don't be thinking you are doomed to work forever. You are going in with £170k equity and your buy to let. In 15 years you could easily sell up in London and buy something else out right and/or use the buy to let as income.
Failing which, as you have no kids you could roll any outstanding mgage onto an equity release deal at retirement. Lots of options.

@Shirlzgirlz I'm sorry to hear that! It's worth starting your own thread as this is an old one, and people will likely just read the first message and respond to that.

One of my BTL flats with cladding issues finally received funding at the start of the year. They still haven't started the work, and we've been told it will take at least 3 years to complete when they finally do start. It's also added loads to the service charge due to the insurance and professional advice costs. Just letting you know that it's a very long (and frustrating) process!

I haven’t read the whole thread but I have been told that if you can’t sell a property due to cladding issues then you can get an extension on the rebate period for the extra stamp duty. In terms of whether to buy in London I would 100% say buy where you want to live and accept the compromises. And it sounds as if the risks of renting for ever outweigh the risks of taking on a mortgage.

ZOMBIE THREAD 👻

You can avoid the second home stamp duty by doing joint borrower sole owner mortgage ( hsbc / metro / Barclays ) and some legal paperwork ..

Would he owned on the deeds by your partner

Colleague just been through this

Zombie thread but interested to hear what OP decided. DH and I are 52 and 40 respectively and have a mortgage half this size but over a short term due to his age, plus both of us are very poorly prepared for our pensionable years due to v similar reasons - peripatetic sectors with poor plans, and housing costs (and now childcare costs too) always being a priority. We know we need to sort it out, but when? ESP with the cost of living now.

Whilst most would be screwed in later life with nowhere to live rent/mortgage free you have the flat out it’s value so it’s not the end of the world. However, it looks affordable but I would suggest you try to over pay so that you can bring the coat down in later years.

Lots of decent two-bed flats and maisonettes with gardens in north (or other parts) London zone 3 for around 400k. I skimmed through and I know other people have mentioned this. I would buy in London for less than you've originally suggested.

Oops 🫣

You are absolutely right to buy somewhere. Renting as an elderly person really isn't good.

You have a good income and the mortgage payments are the same as your rent. I just don't understand how anyone could advise you to carry on renting, it is chucking money away. You have no certainty, your landlord could choose to sell at any time.

I took on a similar size mortgage at 51. Now with the interest rates going up it will make life a bit more difficult but I'm still glad I did it. With hindsight I wish I had overpaid from the start, and I would advise you overpay as much as you can.

I read you would not be happy living in your BTL studio flat, but by living there before you sell you could drastically reduce your capital gains tax should you plan to sell. Could you maybe buy the flat next door and knock through? Or live there for work as a pied de terre, and buy somewhere cheaper and larger in a more rural/cheaper area away from London for weekends/retirement/wfh?

You could get on the property ladder now and then sell your buy to let investment when the cladding is down and use the cash to chip at your mortgage.

an alternative would be buying smaller or something that needs work.

Something else to think about: most flats in London are leasehold so you will be paying service charge and ground rent. Will you be able to cover the mortgage and these additional costs?

As a leaseholder you will have no control on repair costs. Not to mention issues like lease extension might crop up as well.

I just sold my London flat and it was partly because I had concerns about the ever increasing service charge and my lease was slowly approaching 83 years which would make it harder to sell.

I did not want to be a pensioner and not be able to afford the service charge...

I moved out of London to be able to buy a small house with a small mortgage. Again I don't want to tie myself up to having to repay a large mortgage in my 60s when employment opportunities will be limited.

In your situation I would move out of London and buy a house rather than a flat and repay a chunk of your mortgage when you finally are able to sell your cladding-impacted flat.

You will also have to pay higher stamp duty as you already own a home.

Also in term of cladding are you certain that you will not pay anything to cover the expenses of making your building safe? I know that leaseholders have better protection now but some people still end up having to pay for some of the repairs that are not covered by the legislation so be wary of that too.

47 yrs old with 170k available cash and 160k annual income with lucrative and very much in demand career, I would probably buy even more expensive property than 625k. Some advices on here are questionable at best.